KUALA LUMPUR: The Malaysian Aviation Commission (Mavcom) has today revised downward its forecast for Malaysia’s passenger traffic with a contraction of between 36.2 per cent and 38.1 per cent to 67.7 million and 69.7 million passengers this year.
This is a considerable decrease from 2019’s all-time high of 109.2 million passenger, according to Mavcom’s sixth edition of Industry Report, Waypoint, which lays out outlook for the industry in 2020.
The commission said the revised forecast was due to existing flight cancellations by both Malaysian and foreign carriers totalling 14.0 million seats between January and December 2020, and seat reductions of 15 per cent for domestic routes and 20 per cent for international routes.
Mavcom executive chairman Dr. Nungsari Ahmad Radhi said the aviation industry was worst hit by the global Covid-19 pandemic as travel had almost stopped, forcing airlines to be essentially grounded thereby putting them in serious financial distress.
“Our Waypoint report paints a bleak picture. The airlines’ survival, indeed, the landscape of domestic and global aviation industry when the crisis is over, are matters that are still unfolding,” he said in a statement today.
The commission highlighted that material developments would continue to occur in Malaysia and globally during the unprecedented Covid-19 pandemic, affecting the outlook for the local aviation sector.
Mavcom said Malaysian carriers were continuously reducing seat capacity in 2020 in response to low air travel demand and travel restrictions imposed by countries worldwide.
As of March 26, 2020, Mavcom said 7.3 million seats had been cancelled, representing 8.6 per cent of total seat capacity for Malaysian carriers in 2020.
Foreign carriers operating to and from Malaysia had also reduced seat capacity by 6.7 million (24.5 per cent of total seat capacity for foreign carriers) in 2020.
Mavcom said it would continue to monitor such industry developments and look to make adjustments to its forecasts accordingly.
It said the aviation industry operators were presently experiencing difficulty in maintaining their financial well-being, following the severe decrease in travel demand.
The commission expressed that the government should be deemed only a last resort for aviation industry operators in seeking assistance in the light of other public interests competing for public fiscal aid such as healthcare and small-medium enterprises.
As an additional measure to strengthen the industry’s financial resilience over the longer term, Mavcom urged the government to consider relaxing ownership rules for airlines to allow easier sourcing of funds from domestic and international capital markets.
The commission pointed out the need for adherence to merger control provisions in the Malaysian Aviation Commission Act 2015 should any step towards industry consolidation via mergers be explored, to ensure industry and consumer interests remain safeguarded.
“Malaysia needs an aviation sector that supports its economic growth as well as passenger demand for travel. Therefore, the country needs connectivity and healthy competition among airlines.
“A major crisis such as this calls for radical solutions including further consolidation and liberalization, keeping in mind the national imperatives for the industry, safeguarding competition and consumer interests, and practicing good governance.,” added Nungsari.